German inflation kept at bay

Prices for goods and services in Germany increased by 1.3 percent in November, up from 1.2 percent a month earlier, the National Statistics Office (Destatis) reported Wednesday.

"This means inflation continues to be only moderate," the agency commented in its monthly report.

According to the European Central Bank as the guardian of the euro currency, price stability is guaranteed as long as inflation stays below 2 percent, but is not far away from that threshold either.

Oil versus butter?

Destatis pointed to a marked lowering of heating oil and fuel prices in November, with German consumers enjoying a 10.6-percent dip in oil prices due to sluggish global demand.

By contrast, food prices went up again by 3.2 percent, driven particularly by a hefty 26.5-percent hike for butter.

Economists said Germans would generally have to brace for a bigger inflation rate mid-term, not least because of the recent increase in wages, with companies bound to seek compensation for higher labor costs.

The German government's economic advisors said the average inflation rate would reach 1.9 percent throughout 2014, while only coming in at 1.5 percent in the current year.

hg/kms (dpa, Reuters)